<p>I hear stories in the news about students fresh out of college with incredibly high debt scrambling to find that high-paying job to get them out of it. I have also spoken with people who tell me not to fear being in debt until I?m 40. Stretching loan repayments over a long time frame will allow you to live comfortably as long as you can dish out that $200 some odd payment every month. I really do not know what the true scene is today for students who walk out of undergraduate and then graduate school seemingly financially crippled.</p>
<p>Can anyone offer any insight?</p>
<p>I don’t think anyone really knows. See, college and grad school used to be a LOT cheaper than today.</p>
<p>The main point to realize when thinking about your financial future is the reality of your chosen career field. If your passion lies in a career which typically doesn’t pay extremely well, you should consider limiting your student loans to a reasonablely affordable amount. If, though, your chosen field is quite lucrative and expansive, then a larger amount in loans might be profitable.</p>
<p>Also, when deciding how much is reasonable, don’t think about the ability to stretch the payments out for over 10 years…use the 10 year max as your basis for determining your monthly payment. Remember, the longer you take to repay the loan, the more you are actually going to be repaying.</p>
<p>If your student loan debt is $30,000.00 with an interest rate of 6.8% and is repaid in 10 years, you are looking at repaying $41,429.00. If, however, you stretch that to 20 years, your total repayment will be $54,960.95. IOW, you will be paying an additional $13,531.00 in order to redyce your monthly payment by a mere $116.00.</p>
<p>Another thing to think about is controlling your expenses…be reasonable about your extra’s. Do you really need to have an expensive computer or will a cheaper one work? Do you really need to eat out all the time? Basically, what daily things can you minimize to keep your overall cost down.</p>
<p>Also, borrow the minimum you actually need. Just because you are offered more in loans than you need…you are not required to take it all. If you could get away with only borrowing $5,000 this year but are offered $8,000.00 in loans…just take the $5,000.00. This really helps when you enter graduate school…as the loan amounts can be greatly increased. I know of many Graduate students at my institution who borrow $18,500.00 each year when our entire MBA program costs about $18,500 including books. They are doubling their debt unnecessarily.</p>